Pakistan, Iran ink 'Peace Pipeline' deal

ISLAMABAD - After fifteen years of negotiations over the Iran-Pakistan-India (IPI) gas pipeline project, Pakistan and Iran have finally signed the initial agreement in Tehran on Sunday. The project termed as 'Peace Pipeline' by the officials of both the countries has been inked by President Zardari and his Iranian counterpart Mahmoud Ahmedinejad on the sidelines of the tripartite summit on Afghanistan security. However, sources said that negotiations were underway between Iranian and the Pakistani delegations on the issue of gas price.Iranian media had reported the two sides started a fresh round of talks in Tehran on Friday, quoting one Iranian official as saying a date would be set to finalise the deal during the two-day talks. Pakistani delegation negotiating the project is led by Advisor to the Prime Minister on Petroleum Dr Asim Hussain, accompanied by the officials of Petroleum Ministry and the technical team being headed the Managing Director Inter State Gas Systems (ISGC) Syed Hasan Nawab. The ISGS is a semiautonomous body looking after Pakistans interests in the international gas pipeline projects to import gas from Iran and Turkmenistan. The federal cabinet agreed to allow the import of one billion cubic feet gas at the rate of 80 per cent of the price of crude oil. The gas sales purchase agreement with Iran will be signed in the next phase, a member of the delegation told. Official sources said that soon after signing of the gas sales purchase agreement, work would start at the designing of the project. Pakistan has already appointed a German designer firm ILF for the pipeline, Petroleum Ministry sources said, adding that the pipeline would enter Pakistan from its border near Gwader area to Nawabshah, which is the hub of gas pipelines in the country. India had been part of the $7 billion 'peace pipeline project, but stayed away from talks in September last saying it wanted to agree transit costs through Pakistan on a bilateral basis first. The IPI project was conceived in 1995 and India finally decided to quit the project in 2008, after almost 13 years, despite severe energy crisis in that country, while Pakistan is too facing severe criticism from the US over any kind of economic deal with Iran. Official sources say that the sudden change of stance from Pakistani government and the pace of development of the project suggest that the strong US opposition has softened. According to the initial design of the project, the 2,700 kilometres long pipeline would cover around 1,100 kilometres in Iran, while it would cover 1,000 kilometres in Pakistan and around 600 kilometres in India, and the size of the pipeline was also estimated to be 56 inches in diameter. We are still hoping that India would join the project but in other case the size of the pipeline would be reduced to 42 inches as initially estimated, an official of ISGS said. However sources in the ISGS said designing and finalising the reports of financial consultants would take up to one year and the work over the project could be started by mid of 2010. The estimated project completion time is almost five years. Iran, which sits on the worlds second-biggest gas reserves, imports roughly about as much gas as it exports. An Iranian Oil Ministry official has said he hoped that the commencement of gas delivery would start five years after the contract was signed, adding both Iran and Pakistan would welcome India if it decided to join the project. Irans Oil Ministry declared on Saturday last that negotiations on 'Peace Pipeline were underway between Iranian and the Pakistani delegations, which would allow Irans gas to be exported to Pakistan through Assalouyeh. Sources in the Pakistans Petroleum Ministry said that despite approval from cabinet, the country would negotiate to get the gas prices lowered. The official report prepared by the Petroleum Ministry and the ISGS said that the gas would be purchased for power generation and it would enable Pakistan to generate 5,000 megawatts (MW) power. The Petroleum Ministry also said that power generation and usage of imported Iranian gas by heavy industries would result in annual saving of up to $1 billion in furnace oil imports, if the crude oil prices are at $50 per barrel. The reports and calculations forwarded by the ISGS further said that there would be an annual saving of $735 million, if equivalent quantity of LNG was imported for power generation and the saving will increase in line with the hike in global crude oil price. APP adds: Pakistan and Iran will sign the formal agreement for the multi-billion dollar gas pipeline project in a third country within the next 15 days, Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain told APP in Tehran on Sunday. He said the two countries on Sunday signed a final consultative process document as well as an inter governmental framework document of the gas pipeline project known as IPI. Under the document signed on Sunday between the Iranian National Oil Company and Interstate Gas System of Pakistan, Iran will provide 750 million cubic feet of gas per day to Pakistan for the next 25 years. The advisor termed the agreement to sign the deal a breakthrough. He said negotiations were going on for the last ten years on the IPI and today it was a big achievement for Pakistan owing to the efforts of President Asif Ali Zardari. He said once Pakistan starts getting Iran gas supply, it will greatly help overcome the countrys energy needs. Meanwhile, Foreign Office Spokesman Abdul Basit said on Sunday that Pak-Iran Gas Pipeline project has been signed in Iran. Talking to private TV channel, he said work on this project would be started in three to four years. Replying to a question, he said it was an agreement between Pakistan and Iran, however, the agreement had provisions to include India if it wanted to join the project. The spokesman said the trilateral framework had been institutionalised and second summit would he held in October in Pakistan.

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